“PENSIONING” HOUSING WEALTH
Seven years ago, you took advantage of an early retirement offer from the manufacturing facility where you’d been employed for most of your working life. Given the choice to receive a pension for the rest of your life or to “walk away” with a lump sum, you chose the latter. Your thinking was two-fold: you’d enjoyed directing the money in your 401K, moving among the different funds, and were not afraid of continuing to be involved in making investment choices. Truth be told, you were reluctant to trust your future to a company undergoing financial troubles.
While satisfied that you made the right decision about the pension, you’re now in the process of considering the future. In the early years of retirement, you’d been able to bring in some income from temporary jobs, but that has become too physically taxing to be reliable in terms of income. You do have less than a year to go on the mortgage on your well-maintained home, where you plan to continue to spend the rest of your life.
As you approach “normal” retirement age, you will be “turning on” your social security payments early next year. While you still enjoy “playing the market” in your individual investment account, with the IRA funds, you want to be less vulnerable to market fluctuations and are considering converting a large part of that account into one or two fixed annuities. You realize that income will be fully taxable, but, given your concern about the rise in gasoline and car repairs, utilities, and even groceries, having a fixed monthly income, guaranteed for life, in addition to the Social Security benefits, seems very appealing.
As you move into the second phase of retirement, planning to “age in place” while giving thought to stabilizing your income stream, you might consider “pensioning” your own housing wealth. A government-guaranteed tenure reverse mortgage is a way to “annuitize” the equity you’ve built up in your home. So long as you are still occupying your home, keeping up with homeowner’s insurance, property taxes, and home repairs, you will receive equal monthly mortgage payments* for the rest of your life (the concept is similar to the fixed insurance company annuities you’re considering). Those income payments will continue regardless of either positive or negative future changes in the value of your home.
You’ll certainly want to consult your advisors – along with your prospective heirs, before committing to such a plan, but the reverse mortgage will allow you to keep more of your IRA Rollover funds in the market while stabilizing your monthly inflow of cash.
While, seven years ago, you chose to take a lump sum, it might now be appropriate to choose the “pension option” in the form of a tenure reverse mortgage on your home.
https://mutualreverse.com/david-garrison
*Borrower must occupy home as primary residence and remain current on property taxes, homeowner’s insurance, the costs of home maintenance, and any HOA fees. David Garrison, NMLS ID 1595194. Mutual of Omaha Mortgage, Inc. dba Mutual of Omaha Reverse Mortgage, NMLS ID 1025894. 3131 Camino Del Rio N 1100, San Diego, CA 92108. Indiana-DFI Mortgage Lending License 43321. Michigan 1st Mortgage Broker/Lender/Servicer Registrant FR0022702. These materials are not from HUD or FHA and the document was not approved by HUD, FHA or any Government Agency. Subject to credit approval. For licensing information, go to: www.nmlsconsumeraccess.org
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